In the late 1990s, Electronic Data Services customers had been complaining about service, and the company's net profit margin slid from 8.5% in 1993 to a sickly 2.3% in 1999.

A New Nimbleness

In the late 1990s, Electronic Data Systems customers had been complaining about service, and the company's net profit margin slid from 8.5% in 1993 to a sickly 2.3% in 1999.

Enter Richard H. Brown as CEO. The former Cable & Wireless CEO turned around EDS, mostly by improving customer service. How did he pull this off? EDS turned to "service-excellence dashboards," Internet-driven feedback systems that alert EDS customers to outages and other problems. These systems are reviewed regularly by EDS brass.

Clothing retailer J. Crew went to EDS for its data center, but not for other services. "I certainly wouldn't go to EDS for a point-of-sale or cash-management system," says Paul Fusco, J. Crew's chief information officer.

Some CIOs say other outsourcing companies such as Accenture are stronger at application development and support than EDS. One EDS client, Blue Shield of California, suggests that the outsourcing vendor wasn't the best bet for purchasing and installing desktop systems.

Instead, Blue Shield of California decided to negotiate a deal with Dell Computer on its own. "Now EDS is responsible for installation once the Dell equipment arrives." says Dave Bowen, CIO of Blue Shield of California. He continues to work with EDS to reduce the number of LAN servers in its network.

EDS' biggest challenge: Unlike IBM, it doesn't have its own products to sell to customers. As a services-only outfit, the company has lost some major dealsincluding a recent $7 billion-plus contract with Fiatto IBM, which is known to offer discounts on its hardware products. Like other outsourcers, EDS is striking up strategic alliances with Sun Microsystems, Cisco, Microsoft and other hardware, software and networking vendors so that it, too, may cut broader and more financially competitive deals.

Douglas Frederick
President, EDS information solutions
Frederick joined EDS as EVP of U.S. operations in July 1999. He worked at Baan for two years, and held a number of posts at Boeing over 18 years. He has a B.S. from Washington State University and an M.S. from the Massachusetts Institute of Technology

EARTHGRAINS
Steve Brazile
CIO/VP of business systems
(314) 259-7000
Project: Outsourc-ing of IT infrastructure since October 1996. EDS currently maintains about 60 IT staffers on siteat the Sara Lee subsidiary

Online News Editormatthew_rothenberg@ziffdavisenterprise.comMatthew has been associated with Ziff Davis' news efforts for more than a decade, including an eight-year run with the print and online versions of MacWEEK. He also helped run the news and opinion operations at ZDNet and CNet. Matthew holds a B.A. from the University of California, San Diego.